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National retail chains adding new stores on Long Island

An economist credits the area's vibrant business environment, upscale economy and affluent demographics for the wave of additions.

Orangetheory Fitness, a new franchise chain, has 13

Orangetheory Fitness, a new franchise chain, has 13 local gyms and plans to open another 12 in the next two years. Here Jennifer McGraw works out at the East Northport gym on Feb 26, 2012. Photo Credit: Bruce Gilbert

National chains are expanding throughout Long Island, where the region's higher-than-average median household income, a strong economy and dense population base make it a prime spot to set up shop.

Sixteen of the 20 largest retailers by sales as ranked by Kantar Consulting, a retail consulting firm based in London, have a presence in the region. The other four are regional supermarket groups that aren't in the Northeast.

Among the chains expanding here are Patchogue-based SoBol, which sells frozen acai bowls; fast-food restaurant Arby's; and Jersey Mike's Subs.

"Long Island has a very vibrant business environment, so every expanding business wants to be a part of it," said Herman A. Berliner, an economist and dean of Hofstra University’s Frank G. Zarb School of Business. "This is an upscale economy with affluent demographics."

The median household income was $108,133 in Nassau County and $94,750 in Suffolk County in 2017, well above the statewide median of $64,894 and the national median of $60,336, according to the U.S. Census Bureau.

About 2.8 million people live in the Nassau-Suffolk region.

"The high density of educated people makes this a highly competitive market and a great testing ground," Berliner said.

Expanding too quickly can be risky, because "what works in one location, or many locations, doesn’t necessarily work in all locations.  And rapid expansions increase vulnerability, especially if debt financing is involved," he said.

"On the other hand, success attracts imitators, and rapid expansion may preclude those imitators from gaining a foothold," Berliner said.

Fast expansion often saves money, said retail expert Marshal Cohen, a chief industry adviser for the NPD Group Inc. market research firm in Port Washington.

"It can be a big, big benefit to the bottom line," Cohen said. "There are economies of scale with opening multiple locations at around the same time. You get economies of scale with products, store more at a warehouse, and it's less expensive to train staff all at once."

Cohen said he feels expansion risks are generally worth taking.

"We saw the Gap build too many locations, and we've seen banks open too many branches," he said. "It happens. Close a few. It's OK to build more than you need."

Not every popular chain has succeeded in the market, or even tried to come here. For example, convenience chain Wawa, which has 640 stores nationwide, is missing from the retail landscape on Long Island.

"People are flush with money and they want to spend it, but if you don't have an established brand name and aren't offering something different or worthwhile, it's difficult, because it's such a competitive market," said Rakesh Gupta, an associate professor at the Robert B. Willumstad School of Business at Adephi University. "In Nassau County it's even more difficult for food retailers, because the high-traffic areas are already occupied. So it's difficult to find the right location."

Shoppers in wealthier regions also have higher expectations, said Thomas Shinick, an adjunct professor of marketing and management at Adelphi and Nassau Community College in Garden City. 

"They want to customize more, they want quality, and they want something they haven't been able to get before," Shinick said. "If you can deliver, there is an opportunity. But you have to deliver."

Roy Rogers

Arby's

Jersey Mike’s Subs

Orangetheory Fitness

SoBol

Chick-fil-A

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